What is a money market account?

A money market account earns dividends like a savings account with the flexibility of a checking account. But what’s the difference between an MMA and other deposit accounts?

What is a money market account?

A money market account is a dividend-bearing account offered by both traditional banks and credit unions. Sometimes referred to as a hybrid account, a money market account—or MMA—typically offers benefits and features of both checking and savings accounts. MMAs tend to offer better rates than other types of high-yield savings accounts, without restricting access to funds.

When it comes to deposit accounts, the money market account stands out. Money market accounts offer opportunities for security and potential growth. Whether offered by a traditional bank or a credit union, an MMA is a financial tool that can play a crucial role in managing and safeguarding funds. In this article, we’ll define money market accounts and how they differ from other deposit accounts.

Key Points:

  • Money market accounts (MMAs) are dividend-bearing accounts offered by banks and credit unions that provide a mix of checking and savings features.
  • MMAs offer better rates than regular savings, allowing easy access to your funds.
  • MMAs are insured, providing more security than other methods for saving money


Who should get a money market account?

A money market account is great for anyone looking for a more flexible savings account that can support short-term savings goals and adapt to meet their current needs. The fact that money market accounts are secure and insured adds to their effectiveness for building emergency savings.

Here’s an example:

You’re cooking up plans for a much-needed vacation. You’ve got your eye on the weather and notifications set for flight prices, but you haven’t booked yet. You don’t want to face fees for withdrawing money when you’re ready to spring on a deal.

This is a great situation for a money market account. You’d get better rates and more flexibility than a traditional savings account and you don’t pay a penalty if you need to withdraw the funds early like you would with a Term Certificate (more commonly known as a CD or Certificate of Deposit.)


Pros and cons of getting a money market account

Money market accounts come with big benefits, but also have some drawbacks compared with other options. Some of the drawbacks of a money market account don’t apply to SF Fire CU’s accounts. That’s why it’s important to explore your options and find the account that’s best for you. Here’s what you need to know:


  • Attractive APYs: MMAs offer high Annual Percentage Yields (APY), often higher than traditional savings accounts, making them beneficial for short-term savings goals.
  • Easy Access to Funds: MMAs provide features of both savings and checking accounts, some include debit cards and check-writing abilities, making them suitable for those needing easy access to their money in the short term.
  • Your Deposits are Insured: MMAs can be insured by the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) or American Share Insurance (ASI) up to $250,000, ensuring the safety of deposited funds.


  • Monthly Fees: While MMAs offer high yields, they may come with monthly fees for account maintenance, low balances, or exceeding withdrawal limits. SF Fire Credit Union’s Money Market Account has no monthly fees, so we can cross that con off the list.
  • Minimum Balance Requirements: Opening an MMA sometimes requires meeting a minimum balance requirement, ranging from $100 to $2,000, which could be a limitation for those starting with a low balance. However, an MMA with SF Fire Credit Union has no minimum balance required, so that’s another con we don’t have to worry about.
  • Withdrawal Limits: Some banks may impose withdrawal limits on MMAs, potentially restricting the number of transactions per month. SF Fire Credit Union’s money market account also does not have any withdrawal limits, but does not offer check or debit cards, at this time.


How an MMA with a credit union differs from a bank

There are a few differences between credit union MMAs and those provided by banks, but they are largely surface level. Credit unions use the term “dividends,” to refer to what banks would call “interest.”

SF Fire Credit Union members also benefit from share insurance a through American Share Insurance (ASI). American Share is a credit union-owned private organization whose only business is to provide deposit insurance to credit unions like SF Fire CU. ASI insures each and every SF Fire Credit Union deposit (share) account of an individual member up to $250,000, without limitation to the number of accounts held. That's $250,000 for each account, not each member, which provides a substantial layer of extra security for account holders.

Learn more about the benefits of joining a credit union vs. bank.


Money market accounts vs. money market mutual funds

A common point of confusion in the financial landscape lies in distinguishing money market accounts from money market mutual funds. While both carry the "money market" name, they serve different purposes and adhere to distinct regulatory frameworks.

A money market mutual fund account is classified as an investment rather than a traditional savings or checking account. Despite some money market funds allowing check-writing privileges, they fall under the umbrella of investments. These funds are typically offered by brokerage firms and fund companies, and it's crucial to note that they follow regulations set forth by entities such as the Securities and Exchange Commission (SEC) rather than the NCUA, FDIC, or ASI.



In a nutshell, having a good handle on money market accounts is crucial for anyone aiming to optimize the flow, growth, and security of their finances. Whether you're delving into the specifics of interest rates, dealing with various transactions, or weighing in on minimum deposits and insurance coverage, it's all about putting in the effort and making well-informed choices.

At SF Fire CU, we have specialists that can help you sift through financial products and find the best choices for your situation. If you need help deciding what you should do to meet your savings goals, we’re here for you. Get in touch via phone, web chat, or in person.

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